I am seeking advice from my fellow TT'ers on getting a home appraised. Here's what my brother and I are up against. Our mother is in a skilled nursing facility and we have to sell her home to afford her care. Her home, when built in 1998, cost $172,000. It was built as part of a new development in Waterville. My mother paid off the mortgage a few years ago. My brother, unfortunately, has power of attorney. I say unfortunately because he's way in over his head. The house, before the housing bubble burst in 2008, was worth $215,000. We realize we have to sell it for quite a bit less, as do many people, due to the housing market collapse. A few of my co-workers had similar experiences in the last couple of years, so I am aware of the hit we have to take. My brother wanted to dump my mom's house for $110,000. My research of houses in the subdivision shows that a couple of comparable houses in the subdivision sold for $155,000 in 2009-2010. Had to get the relatives involved to kick my brother's ass and ask for at least $135,000, which he did. We are not going with a real estate agent, but selling it ourselves. My brother only put a sign by the curb a couple of months ago. No other promotion. He took the first bid, at $130,000. The buyers' inspector said the house has to have a new roof. The developer apparently had installed defective roofing materials for the entire development. So there's $10,000 off the $130,000. We had hoped, since the buyers are getting a pretty good deal, that they would consider sharing the cost of the roof. We waited for their appraisal to come in, hoping it would show it was worth somewhat more than what they bid as an opening to ask them. The appraisal came in exactly what their bid was. Apparently, the bank's appraiser knew beforehand the amount of the bid. I think we should get our own appraisal independent of the buyer's bank. My brother asked the buyers if they would consider sharing the cost of the roof, and they said no way. Buyers also want us to pay for closing costs. Should we get our own appraisal in hopes it is higher and perhaps the buyers might be willing to share in the cost of the roof? Everything else in this house is perfect. My mother had very sophisticated tastes in furniture, decoration and style. It is a breathtaking 3 bedroom house - with granite countertops, tiled floors, loft, finished basement, etc. I wish to hell I could buy it. Thanks to everyone for any advice you can give me on whether we should get our own appraisal. I apologize for the very long post!
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It probably wouldn't hurt. Also you mentioned you did some research already. I would also check out Zillow to see what they value the house at. They just do estimates but they aren't all that far off.
bikerdude - having a lot of experience with this in the context you have framed it...is your mother going to stay in the skilled nursing facility?
The appraisal the buyers got will be used to determine the amount of the loan the bank is willing to give them, as well as identify any defects with the property. Buyers always hope the appraisal is at least as much as the purchase price. But remember, in getting your own appraisal, you may get one that identifies even more issues than just the roof as well as a lower value. It's a risk.
Also, if you get an appraisal yourself, you'll want to check to see if you'll be required to share that with other potential buyers if this sale doesn't go through.
Closing costs are negotiable - you don't have to agree to their request to pay them.
If you haven't already done so, consider consulting with a real estate attorney since you don't have an agent. Usually, you can find one who, for less than the commission you'd pay a real estate agent, who can review the contract and terms and advise you accordingly.
Good luck - this process is not an easy one.
Don't Appraisers have to prove how they came to the dollar amount when it comes to determining the value of the house? Usually they have to show comparable sales within a certain area to support the amount they they say a house is worth.
I had an appraisal done on some property that I wanted to purchase not long ago. The bank wasn't satisfied with the number of comparable sales offered by the appraiser so they had to include a few comparable parcels that were still for sale at the time.
Regardless, it's a buyers market and the banks are controlling the dance. If you think that what the potential buyers are requesting is unacceptable, then refuse to accept the offer. There's a lot of emotions tied to a house sale and you may feel pressured to sell quickly due to the situation with your Mother. The reality is, however, it's 100% business. Can you live with the reduction? if no, then pass and wait for another buyer. Sooner or later one will come along.
Both my parents and a niece live in Waterville. The niece lives in a newer development. The price
you've agreed to sounds way too low for that area
and for a newer home.
Good advice to consult an attorney on all these issues.
Hold up. Before you agree to the buyers requests and sell this house, you need to check in with Job and Family Services (who administers Medicaid in Ohio). It sounds like your mom doesn't have any other resources to pay the bills and thus will need to make an application for Medicaid once her time on Medicare is up and she moves into assisted living. You can qualify for Medicaid without selling the house for a short period of time (I believe 13 months). However, Medicaid will also have a lien for what they paid out after the house is sold. Also, they have some rules about what the house can be sold for, so before you complete this sale, you need to make sure you are not causing problems as far as qualifying her for Medicaid later. Call Job and Family Services first thing Monday.
Ace_Face made some very good points.
It sounds like your brother may be in over his head trying to sell the home without an agent or legal advice.
Best of luck to you, and hope your mom is doing ok as well.
THANK YOU ACE FACE! Selling the home to pay long term care is not easy. Also, medicade will not let you sell the house for anything under 10% of the county's apraised value. Been there done that.
I faced somewhat similar cicumstances last year. Do what Ace says, know your Mother's options and don't settle for the offer at this time. I feel that it would be a mistake, it sounds rushed to me. Stand back, take a deep breath and don't discount what a realtor may be able to do for you. Know your Mother's rights first, then act accordingly. Good luck and God bless you during this trying time. An attorney's help may be justified as well, I know it did wonders for the situation I was faced with.
Lots of comments here:
You say your mother is in nursing home and your brother has POA - but is your mother incompetent? If she is competent (of sound mind and can make decisions), and he simply has POA for convenience, see if she will revoke the POA.
If she is incompetent, was the POA 'durable', which means it is good even when the grantor becomes incapacitated. If it is not durable (word should be in title or somewhere in document), and she is incompetent, the POA is not valid.
Get your own inspector on the roof - 12-14 years on a residential roof is not that long. Make sure it does need a new roof and check the price.
While property values have dropped they have not dropped 40% in the 'burbs. What is the auditor's office value of the property? That would be a decent gauge, although not as good as an appraisal.
In doing your comparison review, make sure you are not comparing house in 'distress', meaning it was voluntary, arms-length transactions, not foreclosures or short sales. Dropping $60k in less than two years is again, not typical of housing in the 'burbs.
Personally, tell the buyers at $130K, stuff the roof and stuff the closing costs, close it as is or not at all. And if they say no, get a realtor who knows the market to handle the sale. Right now you are losing money possible on price, potentially on the roof and closing costs, and meanwhile time.
Its a buyer's market, but sellers shouldn't be afraid to make fair demands for their property.
There was a problem with some shingle produced during that time, neighbor is a builder and he had the problem with his mothers house, as well as a couple others he has worked on. Forgot the name think Owens Corning 25 year shingles had some manufacturing issues, can get some money from them over it, have to send in samples and work with them about it though.
Totally agree with Mrs.Archer. Tell the buyers they purchase "as is" or walk away. Like others have said here, check your mom's options and tell your brother to get a realtor- you can negotiate the percentage with them! Goodluck
Let me just add 2 more cents to this discussion. Spending a few bucks to consult with an attorney for estate planning and selling real estate can save you many more bucks down the road. I've seen too many messes who folks who either used LegalZoom or just printed off a form from the internet and thought they were good. Attorneys have malpractice insurance if they screw up, LegalZoom does not. /spam
Thanks for all your advice! There are many things you've all said that I will be looking into this week.
I just sent you some messages on your microblog thing.